Material, Labor, and Variable Overhead
Variances
The following summarized manufacturing data relate to Thomas
Corporation’s April operations, during which 2,000 finished units
of product were produced. Normal monthly capacity is 1,100 direct
labor hours.
Standard Units Costs | Total Actual Costs | ||||||
---|---|---|---|---|---|---|---|
Direct material | |||||||
Standard (2 lb. @ $9.00/lb.) | $18 | ||||||
Actual (4,200 lb. @ $10.20/lb.) | $42,840 | ||||||
Direct labor | |||||||
Standard (0.5 hr. @ $24/hr.) | $12 | ||||||
Actual (950 hrs. @ $23.40/hr.) | 22,230 | ||||||
Variable overhead | |||||||
Standard (0.5 hr. @ $6/hr.) | $3 | ||||||
Actual | - | 6,450 | |||||
Total | $33 | $71,520 |
Determine the following variances:
Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable.
Materials Variances | ||
---|---|---|
Actual cost: | Answer | |
Split cost: | Answer | |
Standard cost: | Answer | |
Materials price | Answer | AnswerFU |
Materials efficiency | Answer | AnswerFU |
Labor Variances | ||
---|---|---|
Actual cost: | Answer | |
Split cost: | Answer | |
Standard cost: | Answer | |
Labor rate | Answer | AnswerFU |
Labor efficiency | Answer | AnswerFU |
Variable Overhead Variances | ||
---|---|---|
Actual cost: | Answer | |
Split cost: | Answer | |
Standard cost: | Answer | |
Variable overhead spending | Answer | AnswerFU |
Variable overhead efficiency | Answer | AnswerFU |
Material Variance
Actual Cost | $ 10.20 |
Split Cost | |
Standard Cost | $ 9 |
Material Price( $ 9 - $ 10.20 = $1.20 × 4,200) | $5040 U |
Materials Efficency ( Actual usage - Standard usage )(4200 - 4000) | $ 200 U |
Labour Variance
Actual Cost | $ 23.40 |
Split Cost | |
Standard Cost | $24 |
Labour Rate ( 24 - 23.40 = .60 * 950 = $ 570) | $570 F |
Labour Efficiency ( .50*2000 = $1000 - 950 = 50 * 24 = $ 1200) | $1,200 F |
Labour rate is favourable due to 60 cent savings
Variable Overhead Variance
Actual Cost | Not Given |
Split Cost | |
Standard Cost | $ 6 |
Variable Overhead Spending ($950 * 6 = $ 5,700 , $6450 - 5700 = $ 750 | $ 750 F |
Variable Overhead Efficiency ( $1000 - 950) * 6 = $ 300 F | $ 300 F |
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Question text Material, Labor, and Variable Overhead Variances The following summarized manufacturing data relate to Thomas Corporation's April operations, during which 2,000 finished units of product were produced. Normal monthly capacity is 1,100 direct labor hours. Standard Units Costs Total Actual Costs Direct material Standard (2 lb. @ $17.00/lb.) $34 Actual (4,200 lb. @ $17.80/lb.) $74,760 Direct labor Standard (0.5 hr. @ $32/hr.) $16 Actual (950 hrs. @ $31/hr.) 29,450 Variable overhead Standard (0.5 hr. @ $14/hr.) $7 Actual -...
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